The world's second largest lithium producer: oversupply in the market Lithium prices will continue to decline throughout the year



The world's second largest lithium producer: oversupply in the market Lithium prices will continue to decline throughout the year

On November 17th, Cailian News Agency (Editor Xia Junxiong) - Chile Mining and Chemical (SQM), the world's second largest lithium producer, has warned that as excess lithium supply continues to affect the supply chain of electric vehicle batteries, lithium prices will further decline within the year.

SQM released its third quarter financial report on Wednesday, showing a revenue of $1.84 billion and a net profit of $479.4 million, a decrease of 56.4% compared to the same period last year.

Lithium is one of the key metals for achieving energy transformation. After two consecutive years of high prices in 2021 and 2022, lithium prices have rapidly declined since the end of 2022. The price of battery grade lithium carbonate has dropped from 487500 yuan/ton at the beginning of the year to about 150000 yuan/ton currently.

SQM attributes the significant decline in lithium prices this year to excess inventory (especially in Asia) and increased supply. SQM CEO Ricardo Ramos stated that these pressures may continue to put pressure on lithium prices in the short term.

SQM has maintained its forecast of a 20% increase in lithium demand this year and is optimistic about the long-term prospects for electric vehicle sales.

However, SQM warns that the trend of lithium price decline may continue for the rest of this year, and the company's sales in the fourth quarter will be at the same level or lower than the previous quarter.

SQM is closely monitored as it is more susceptible to spot prices than its peers.

SQM stated that its lithium carbonate production capacity has reached 200000 tons per year and is expected to expand to 210000 tons by early 2024, earlier than expected.

It is worth mentioning that earlier this month, the world's largest lithium producer, Yabao Company of the United States, lamented that it was a bit confused by the continued decline in lithium prices despite the healthy demand for electric vehicles.

However, in the long run, the market is still optimistic about the future prospects of lithium, and even traditional energy giants want to take a share.

On Monday, American oil giant ExxonMobil announced that the first phase of its lithium project in southwestern Arkansas has officially started.

ExxonMobil stated that it is expected to produce the first batch of battery grade lithium by 2027, and to meet the annual demand for 1 million electric vehicles by 2030.

Mike Wirth, the CEO of Chevron, another energy giant, has also stated that as a company with extensive experience in extracting oil and natural gas, extracting lithium metal meets Chevron's "core capabilities".